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The Dow Jones Industrial Average, a barometer of Wall Street's health for over 127 years, is considering a reshuffle that may see three of its constituents - Walgreens Boots Alliance (NASDAQ:WBA), Verizon Communications (NYSE:VZ), and Intel (NASDAQ:INTC) - facing removal due to their dwindling share prices. The index, unlike the market cap-weighted indices like the S&P 500 and Nasdaq Composite, is share price-weighted. This means that the higher a component's share price, the more influence it has within the Dow.
Walgreens Boots Alliance, which joined the Dow in June 2018, has seen its shares drop by 66% as of Tuesday. Despite a plan to boost higher-margin healthcare services and reduce annual operating costs, the company's shares contribute just 147.51 points to the Dow's total of 34,618 points. The pharmacy chain is contending with issues such as increased theft and weaker customer traffic. Potential replacements for Walgreens could be leading medical-device companies like Medtronic (NYSE:MDT) or Intuitive Surgical (NASDAQ:ISRG).
Verizon Communications is another member potentially facing removal. Since its inclusion in the Dow in April 2004, Verizon's shares have barely moved, increasing by only 0.53%. As of Tuesday, its closing price accounted for just 222.32 Dow points. Given its high debt levels and limited growth rate, Verizon could be replaced by one of the largest publicly traded companies, Alphabet (NASDAQ:GOOGL) or Meta Platforms (NASDAQ:META).
Intel, a semiconductor company included in the Dow since November 1999, is also at risk due to its stagnant performance. As of Tuesday, Intel's share price of $37.88 accounted for only 249.23 Dow points. The company's struggle to adapt to a cloud computing-centric environment and modest losses in market share to key competitors like Advanced Micro Devices (NASDAQ:AMD) or Nvidia (NASDAQ:NVDA) could lead to its removal from the index.
Changes to the Dow Jones Industrial Average are regular but significant events that reflect shifts in the broader economy. The potential removal of Walgreens Boots Alliance, Verizon Communications, and Intel underscores the evolving nature of their respective industries and the challenges these companies face in maintaining their positions within the index.
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